The chief executive of South Korea’s top battery maker LG Chem recently said that despite the subpar quality of locally-made battery pouch film, the firm will try to replace some of its Japanese suppliers with local manufacturers.
“It’s true that we have been relying on Japanese suppliers such as DNP and Showa Denko because local suppliers are lower in quality and also too expensive,” said Kim Myung-hwan, CEO of LG Chem who also doubles as the head of the firm’s battery research institute. “Our job is not to consider nationality when finding suppliers, but under the circumstances, we will do our best to replace with local firms.”
He was addressing the KABC 2019 conference hosted by market research firm SNE Research.
The comments come as the Tokyo government is poised to act on its recent decision to delist South Korea from its export whitelist – a move that would effectively deprive the country from privileged trade partner status.
Some of the local suppliers Kim mentioned as potential partners were Youlchon Chemical and Korea Aluminum. In fact, LG Chem has already tested the battery pouch film manufactured by Youlchon, but the products failed to fulfill LG’s standards. LG believes it would take at least two years for it to replace its Japanese suppliers.
The LG Chem CEO also said that even after being taken off the whitelist, there would not be too many problems because both DNP and Showa Denko are IC companies. “The reason we are seeking localization is to prepare for worst-case scenarios,” he added.
Battery pouch film protects the battery cells from foreign substances, and also affects the overall efficiency. Both LG Chem and SK Innovation, which supply pouch type batteries for electric vehicles, entirely depend on Japanese suppliers for the film. Globally, Japanese makers hold an over 70% global market share.
Addressing questions about whether LG Chem has supplied cylindrical batteries for Tesla, the CEO declined to comment.
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